Criticism: Tesco have faced an angry backlash for signing up to the Government scheme - and employing people on benefits for an initial period without pay

Tesco announced last night that it would pay youngsters on a Government work experience scheme after campaigners accused the supermarket giant of employing ‘slave labour’.

The U-turn is a blow to the Coalition’s flagship programme, which has already been hit by a string of defections from high street stores following a well-orchestrated campaign on Twitter.

Superdrug, electronics retailer Maplins and mental health charity Mind all announced yesterday that they have pulled out of the scheme completely, after Waterstones and Sainsbury’s also quit.

However, Tesco, Britain’s largest private employer, said it would not withdraw from the programme entirely. Instead it has decided to offer an alternative to the 1,500 unemployed referred to the company by job centres over the next six months.

Currently, under the ‘workfare’ scheme, the unemployed are not paid for their four-week placements although they still receive Jobseekers’ Allowance.

Instead, Tesco said it would offer a four-week paid placement with a guaranteed offer of a job at the end, if the trial goes well.

It means that those working 25 hours a week at one of its stores would earn around £175 compared with less than £54 if they stay on benefits. Anyone taking up Tesco’s offer of paid work experience would forfeit their benefits.

Tesco’s decision yesterday threatened to undermine the Coalition’s jobs scheme, which is aimed at 18- to 24-year-olds who have been unemployed for more than three months.

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The U-turn came after one of its stores in central London was forced to close on Saturday after being invaded by members of pressure group Right to Work.

No pay: The job is advertised in East Anglia for jobseeker's allowance plus expenses only

The activists said they were angry at a job advert looking for permanent workers in exchange for expenses and Jobseekers’ Allowance.

The group had planned to hold protests today at a number of Tesco shops, including two in London and one in Kingston upon Thames. Human rights lawyers, led by Phil Shiner, have also threatened to sue firms taking part in the scheme.

Tesco has also suggested to the Department for Work and Pensions that to avoid any misunderstanding about the voluntary nature of the scheme, the risk of losing benefits should be removed.

Nick Clegg said that people who condemn a scheme that helps people into work at a time of high unemployment needs to think hard about their priorities

Currently, access is voluntary, but if participants leave without ‘good reason’ after the first week, they can lose two weeks’ Jobseekers’ Allowance.

Tesco has committed to 3,000 work placements under the programme, with around half already delivered.

Richard Brasher, Tesco chief executive, said: ‘We know it is difficult for young people to give up benefits for a short-term placement with no permanent job at the end of it.

‘So this guarantee that a job will be available provided the placement is completed satisfactorily should be a major confidence boost for young people wanting to enter work. We will offer the choice of paid work and the jobs guarantee to the remaining placements.

‘Some 300 young people undertaking work experience with Tesco have found work with us and we are confident many more will through this approach.’

A spokesman for the DWP said: ‘Tesco have said it is continuing to be a part of the work experience scheme. What they have also said is they will be delivering an additional offer to young people that will help more find permanent employment – that has to be a good thing.’

A spokesman for David Cameron said: ‘This is something to be welcomed. But the point here is that the purpose of people receiving benefits is not just to give people those benefits but to get people back into work.

‘For some people, getting some basic experience, getting a bit of guidance and going into a place of employment every day is a very useful way of getting them back into the labour force.’

Deputy Prime Minister Nick Clegg said: ‘Anyone who wants to condemn a scheme that helps people into work at a time of high unemployment needs to think hard about their priorities. It is not slave labour. It is not compulsory. It is entirely voluntary.’

Asked if he had any concerns about young people stacking shelves in a supermarket for free, he added: ‘I have absolutely no qualms at all about the idea – rather that than a young person sitting at home, feeling lonely and getting depressed because they don’t know what to do with their lives.

‘It is better to give them the opportunity for a few weeks to actually work, and of course retain their payment through their benefits.’